Life satisfaction and self-employment: A matching approach

Martin Binder and Alex Coad ()

Papers on Economics and Evolution from Philipps University Marburg, Department of Geography

Abstract: Despite lower incomes, the self-employed consistently report higher satisfaction with their jobs. But are self-employed individuals also happier, more satisfied with their lives as a whole? High job satisfaction might cause them to neglect other important domains of life, such that the fulfilling job crowds out other pleasures, leaving the individual on the whole not happier than others. Moreover, self-employment is often chosen to escape unemployment, not for the associated autonomy that seems to account for the high job satisfaction. We apply matching estimators that allow us to better take into account the above-mentioned considerations and construct an appropriate control group. Using the BHPS data set that comprises a large nationally representative sample of the British populace, we find that individuals who move from regular employment into self-employment experience an increase in life satisfaction (up to two years later), while individuals moving from unemployment to self-employment are not more satisfied than their counterparts moving from unemployment to regular employment. We argue that these groups correspond to "opportunity" and "necessity" entrepreneurship, respectively. These findings are robust with regard to different measures of subjective well-being as well as choice of matching variables, and also robustness exercises involving "simulated confounders".

Keywords: self-employment; happiness; matching estimators; unemployment; BHPS; necessity entrepreneurship Length 26 pages (search for similar items in EconPapers)
JEL-codes: C21 J24 J28 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-ent, nep-hap, nep-lab and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Life satisfaction and self-employment: a matching approach (2013)
Working Paper: Life satisfaction and self-employment: A matching approach (2010)
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